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With 50 billion connected devices in existence by 2020, the Internet of Things (IoT) is exploding, opening up a world of opportunities for businesses to reinvent themselves by creating new, more efficient products and by offering next level customer service. We give you the lowdown on the opportunities and risks your clients should watch out for.
A recap: what is the Internet of Things?
You’ve already heard of smart fridges telling you when you’ve run out of milk, or that self-driving cars will soon be commonplace. Simply put, the Internet of Things (also called the internet of everything) refers to the connection of devices to the Internet. So not your usual smartphones and computers but appliances, cars, lights, signage, even cows!
IoT devices in homes can be used to manage your appliances, lighting, security and energy usage. Almost anything under the sun can be made ‘smart’, from heart monitors to labels sensing when a whisky bottle is opened, from electricity meters to traffic lights. As technology rapidly advances and the IoT grows, more and more devices will join that list.
Smart cities are already making news, with Copenhagen using sensors to monitor bike traffic in real time, London launching a smart parking project that allows drivers to quickly locate parking spaces, and Barcelona rolling out a whole host of smart meters that monitor energy consumption, waste disposal and much more.
How the IoT can transform businesses
There is also a never-ending list of applications for businesses who can use these networked systems and collected data to improve products and processes to:
Enhance the customer experience: In a retail store, a smart mirror can help a customer ‘virtually’ try on clothes, without having to make multiple trips to a fitting room. Smart beacons in stores can connect to shoppers’ smartphones and notify them of special offers or discounts when they walk past. Gyms can use IoT technology to track who is using what type of exercise machine, helping them to better service customers and cut waiting times for popular machines.
Add important safety benefits: A company called En-Gauge uses IoT to monitor and track various safety equipment, from fire extinguishers and medical oxygen tanks, to ensure that they are placed in the right locations and are charged and ready to be used during an emergency.
Be more productive: In a water-scarce country like South Africa, there will surely be a huge benefit in an innovation offered by John Deere. The company is building sensors into machines to measure soil moisture to assist farmers in planning field irrigation. They are also incorporating the technology into harvesting and planting machinery to automatically and precisely guide equipment during operation.
Improve efficiency: United Parcel Service (UPS) installed GPS devices in its delivery vehicles in 2008 already, which connects to a special on-road navigation system to identify the shortest and most fuel-efficient routes saving them a vast amount of money in fuel.
Save costs and reduce risk: IoT are also being used by insurers to help safeguard customers in terms of safety, security, and leaks using security cameras, sensors, and leak detectors that can be connected to the Internet. In partnership with the Sensor Networks, a Santam policyholder can now have an electric geyser retroactively fitted with a smart-geyser device linked to a smartphone app. In the event of a leak, burst geyser or blow element, the device recognises the problem and automatically shuts off the water and electricity supplies to the geyser, limiting any resultant consequential damage. Homeowners can also manage their geyser temperature and heating schedule, and Santam receives immediate notifications when an issue occurs, leading to the speedy processing and resolution of any resultant claims.
Knowing the risk of hacking and cyber crime
Unfortunately, wherever data is transmitted over the internet, there is a risk of hacking. Cyber crime is rife and opportunists are already able to infiltrate unsecured devices. For example, a few years ago a team of researchers was able to take total control of a Jeep SUV using the vehicle’s CAN bus. They could ‘hijack’ the vehicle over the cellular network, enabling it to speed up, slow down and even veer off the road.
It might sound like the stuff of a science fiction movie but businesses need to realise that with the reward of innovation comes greater risk. As your clients start to experiment with IoT technology, be sure to remind them to have adequate business insurance in place to cover themselves - in particular, cyber crime insurance.
Santam works with specialist underwriters, SHA, to offer cyber insurance cover that has been designed to cover the various impact points of a cyber attack. The cover responds to a range of privacy and network breaches that could otherwise lead to third party litigation and substantial business interruption losses. A combination of reputation and system restoration extensions also seek to get the business back into the state it was in prior to the attack, as quickly as possible.
Get in touch with your relationship manager or contact us if you have any queries about specialist liability insurance products such as cyber insurance.
For more advice tailored to intermediaries, visit our blog for useful product-related articles – such as legal liability insurance.
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